Tax Planning

Taxes can be one of a small business' biggest expenses.  An unexpected tax bill can cripple or fatally damage a small business.  Draconian regimes exist to charge enormous penalties for being late with a return or making a mistake. 

Whilst we would never be part of any deliberate illegal tax evasion schemes, there are many opportunities for small businesses to benefit from perfectly legal tax incentives with a bit of careful planning.  At a very simple level, most small businesses could benefit from:-

Claiming all legitimate expenses

Business mileage in a private car (we can help you claim using the HMRC mileage rates or claim a proportion of your actual costs of motoring)

Proportion of costs of your own home (rent, mortgage interest, rates, insurance, repairs, etc) if you do any work at home (including admin)

Proportion of broadband, home and mobile telephone costs used for business

Relevant professional subscriptions

Training to keep yourself up to date

Relief for the value of tools and equipment previously owned personally but now used within your business (including office and computers)

And so on...we can help you make sure that you are claiming the right amount of expenses!

Choice of business structure

The tax paid by a business can vary enormously depending on whether it is a sole trader, partnership or limited company - we can help you decide which structure to adopt when you first start up and make any changes afterwards - with our guidance, the legalities and formalities of changing aren't that bad!

Choice of year end

There are still opportunities to reduce or delay tax bills and even secure a tax refund, if you are a sole trader or partnership, initially by selecting the most appropriate year end for the first period of trading, and then changing again once the business has been operational for some time.  Don't assume your "year end" has to be the anniversary of starting up or the tax year end 5 April - it doesn't have to be either and we can help you choose the best date for your circumstances

Spouses and family members

Your spouse, parents, children, siblings, etc., probably work in your business - it is perfectly legitimate to pay them a reasonable wage for the hours they work - do it right and you can knock down your tax bill - let us help you do it legally with the minimum of fuss and bureaucracy

 

Looking at the bigger picture and more complex matters:-

 

Pension contributions

Continue to be one of the best tax-saving ideas - if you are a higher rate taxpayer, a £10,000 investment in a pension costs you only £6,000.  If you've got a large amount of cash in existing pensions or your business can finance substantial contributions, you may benefit from a self administered pension scheme that could actually buy commercial premises for your business to work from, partly funded by the taxman!

Sale or purchase of a business

The breakdown of the price (i.e. property, equipment, goodwill, stock, etc) has a massive impact on the tax liabilities

Buying or selling shares in a limited company as opposed to buying or selling the assets from the company also has a massive impact on tax liabilities

The timing of selling your business may affect your tax bill

Let us help guide you in the right direction so that you can negotiate the terms of sale or purchase for your best tax advantage

Financing property, equipment, vehicles, etc

There are different tax implications as to whether you buy, lease, buy on HP, rent, contract hire, your business premises, equipment and vehicles - let us help you decide the best way to go to maximise tax relief

Timing

As tax is worked out strictly according to time periods, you can benefit from delaying or advancing your business transactions - it may be better to buy your next piece of plant before the year end, or perhaps after, it may be better to delay starting a new project until the new financial year - let us help you get the timing right to your best advantage from a tax point of view

Closing down a business

Depending on your business structure, you may save tax by speeding up or delaying the close down of your business

Joint Ownership of business assets

Even if your spouse or relatives don't work "in" your business, if they invest (or give security on their assets) for your business, and you expect to give them a proportion of the ultimate profits, you could save tax by giving them a partnership share or shares in your limited company from the outset

Tax incentives for specific expenditure

Get better tax relief for buying an environmentally friendly car rather than a gas-guzzler

Enhanced tax relief (and repayment) for investing in scientific research and development

More tax relief for renovating flats above a shop (i.e. typical High St with derelict or unused floors above ground level)

Better tax relief for spending on energy saving plant

The above gives a flavour of how tax planning could work for you.  You don't have to make millions to benefit from a bit of tax planning advice.  In fact, in proportion to personal wealth and tax liabilities, the biggest winners of even the simplest tax planning ideas are the smallest and lowest earning businesses!  A warning though - most tax planning needs to be done well in advance and we need plenty of notice of your plans - we'll probably not be able to do anything for you (or we'll be severely limited) if you ask our advice after the event!